Selling Croatia Or Selling out Croatia? Tourism, Privatization and Coastal Development Issues in a "New" Democracy
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SELLING CROATIA OR SELLING OUT CROATIA ? Tourism, Privatization, and Coastal Development Issues in a "New" Democracy Pamela Ballinger Bowdoin College The National Council for Eurasian and East European Researc h 910 17 th Street, N.W. Suite 300 Washington, D .C. 20006 TITLE VIII PROGRAM Project Information* Contractor : Bowdoin College Principal Investigator : Pamela Ballinger Council Contract Number : 817-01f Date : October 24, 200 3 Copyright Information Individual researchers retain the copyright on their work products derived from research funde d through a contract or grant from the National Council for Eurasian and East European Researc h (NCEEER). However, the NCEEER and the United States Government have the right to duplicat e and disseminate, in written and electronic form, reports submitted to NCEEER to fulfill Contract o r Grant Agreements either (a) for NCEEER's own internal use, or (b) for use by the United States Government, and as follows : (1) for further dissemination to domestic, international, and foreign governments, entities and/or individuals to serve official United States Government purposes or (2 ) for dissemination in accordance with the Freedom of Information Act or other law or policy of th e United States Government granting the public access to documents held by the United State s Government. Neither NCEEER nor the United States Government nor any recipient of thi s Report may use it for commercial sale . * The work leading to this report was supported in part by contract or grant funds provided by th e National Council for Eurasian and East European Research, funds which were made available b y the U.S. Department of State under Title VIII (The Soviet-East European Research and Trainin g Act of 1983, as amended) . The analysis and interpretations contained herein are those of the author . ii Executive Summary The collapse of the state socialist systems of Eastern Europe and the (former) Soviet Unio n between 1989-1991 ushered in what some analysts (Bryant and Mokrzycki 1994) have calle d "The New Great Transformation," the expected transition to democratic, capitalistic societies . Yet this transformation has occurred only belatedly in Yugoslav successor states like Croatia , owing to the violence and economic devastation brought about by Yugoslavia's collapse and th e authoritarian control exerted by independent Croatia's first president Franjo Tudjman (1991 - 1999). Tudjman's death and the subsequent election of a democratic coalition in 2000 hav e finally made privatization, the welcoming of foreign capital, and economic restructuring ke y priorities within Croatia. This paper explores that ongoing privatization process, focusing on th e once lucrative tourist trade . Both political leaders and everyday Croatians currently pin much o f their hope for economic recovery on tourism . Examining the success with which privatization is being carried out in Croatia's tourist secto r requires considering the ways in which Yugoslavia's unique socialist system and its dramati c dissolution have shaped this transition process . The warfare that erupted after the declarations of independence by the republics of Slovenia and Croatia in June 1991 surprised man y Yugoslavs and foreign observers alike . Some scholars even expected Yugoslavia — independent of th e Soviet bloc since 1948, possessed of hybrid economic institutions that departed from the rigi d central planning of the Soviet Union and its satellites, and open to the West (both welcoming tourists from the West and permitting its own citizens to work and travel abroad) — to experienc e a much easier and more successful economic and political liberalization than the Warsaw Pac t countries (Gruenwald 1987 : 528). When the opposite instead occurred, scholars and polic y iii analysts addressed themselves to the most pressing problems at hand : trying to end the conflicts , redrawing state borders, and coping with massive refugee flows . As a result, the issue of privatization and changing regimes of property rights receive d relatively little attention in the successor states of Yugoslavia (with the exception of Sloveni a and the question of property reparations to refugees) until recently, despite the fact that this issu e has been central to studies of the "transition" elsewhere in Central and Eastern Europe . Tourism , it is argued, offers a valuable window onto a wide spectrum of challenges of great significance for Croatia's future prospects for democracy and economic well being . iv Introduction The collapse of the state socialist systems of Eastern Europe and the (former) Soviet Unio n between 1989-1991 ushered in what some analysts (Bryant and Mokrzycki 1994) have calle d "The New.1 Great Transformation," the expected transition to democratic, capitalisti c societies Yet this transformation has occurred only belatedly in Yugoslav successor states like Croatia , owing to the violence and economic devastation brought about by Yugoslavia's collapse and the authoritarian control exerted by independent Croatia's first president Franjo Tudjman (1991 - 1999). Tudjman's death and the subsequent election of a democratic coalition in 2000 hav e finally made privatization, the welcoming of foreign capital, and economic restructuring ke y priorities within Croatia. This paper explores that ongoing privatization process, focusing on th e once lucrative tourist trade. Both political leaders and everyday Croatians currently pin much o f their hope for economic recovery on tourism . Examining the success with which privatization is being carried out in Croatia's tourist secto r requires considering the ways in which Yugoslavia's unique socialist system and its dramati c dissolution have shaped this transition process. The warfare that erupted after the declarations o f independence by the republics of Slovenia and Croatia in June 1991 surprised man y Yugoslavs and foreign observers alike . Some scholars even expected Yugoslavia – independent of th e Soviet bloc since 1948, possessed of hybrid economic institutions that departed from the rigi d central planning of the Soviet Union and its satellites, and open to the West (both welcoming tourists from the West and permitting its own citizens to work and travel abroad) – to experienc e a much easier and more successful economic and political liberalization than the Warsaw Pac t ' This paper builds upon almost a year of fieldwork carried out in Dalmatia (Dubrovnik) and Istria (Rovinj). I am grateful to the National Council for Eurasian and East European Studies for awarding me a Policy Research Fellowship and to Bowdoin Colleg e for providing me with a Kenan Fellowship, both of which made this research possible . I appreciate the assistance provided by th e staffs of the libraries at the Centro di Ricerche Storiche di Rovigno and the Fakultet za turizam i vanjsku trgovinu in Dubrovnik . Thanks also go to John Henshaw for his editing suggestions . 1 countries (Gruenwald 1987 : 528). When the opposite instead occurred, scholars and polic y analysts addressed themselves to the most pressing problems at hand : trying to end the conflicts , redrawing state borders, and coping with massive refugee flows . As a result, the issue of privatization and changing regimes of property rights receive d relatively little attention in the successor states of Yugoslavia (with the exception of Sloveni a and the question of property reparations to refugees) until recently, despite the fact that this issu e has been central to studies of the "transition" elsewhere in Central Eastern Europe . From another direction, little theoretical work has been focused on the problem of tourism in transitio n (Williams and Baláz 2000 : 37), Tourism, I argue, offers a valuable window onto a wide spectru m of challenges of great significance for Croatia's future prospects for democracy and economi c well being . Tourism and Ownership under Yugoslavia Before considering the state of tourism in contemporary Croatia, it proves necessary t o outline the development of tourism within the socialist context . Croatians working within the tourism industry today inherited not only the old material infrastructure of that well developed tourist sector but also much of its work culture (expectations about work, ideas about labor- management relations, and understandings of ownership) associated with it . 2 When Tito and his communist supporters came to power in 1945, they inherited a touris t tradition derived from the Habsburg period. Spas catering to the wealthy elite came int o existence by the end of the 18th century and flourished in the 19 th as developments in transport (railway and steamers) connected the Viennese metropole to its outlying territories (Allcoc k 2 On the persistence of socialist values and the inertia of cultural and political systems, see Mares, Musil, and Rabusic 1994 ; on the use of a 'path dependency' approach that takes institutional legacies into consideration, see Stark 1992 ; Williams an d Baláz 2002 . 2 1991 : 237). The "Hygiene Society," formed in 1869 on Hvar, extended the reach of this earl y "health tourism" whereas grand hotels like the "Kvarner" in Opatija and the "Imperial" i n Dubrovnik were established in the following three decades (Pirjevec 1989 : 143). Tourists continued to come to these former Habsburg resorts under the first Yugoslav state, whic h established a Department in the Ministry of Trade and Industry for the traffic of foreign visitors . The JUG Tourist Association, founded in 1927, also sought to promote winter tourism in place s previously outside tourism circuits, such as Macedonia (Vasilevska 1998 : 269-270) . Initially following a Soviet model (Shaw 1991), socialist Yugoslav tourism broke with thi s older tradition of elite tourism in favor of domestic tourism premised upon the rejuvenation an d reproduction of the working class . What Vukicevic has called "trade union tourism" replaced the elite tourism of old, with tourism tightly controlled by the Ministry of Commerce and Supply i n the federal capital Belgrade and by the sole state travel agency Putnik, which took its name fro m the first travel agency in Yugoslavia founded in 1923 (Allcock 1991 : 239).